MAC.APP./231/2011 of NATIONAL INSURANCE CO LTD Vs JAGMINDER SINGH & ORS

IN THE HIGH COURT OF DELHI AT NEW DELHI

+ MAC.APP. 231/2011

Date of decision: 16[th] July, 2012

NATIONAL INSURANCE CO LTD ..... Appellant Through: Mr. Pankaj Seth, Adv.

versus

JAGMINDER SINGH & ORS ..... Respondents

Through: Mr. R.P. Pahwa, Adv. for R-1 & R-2. Mr. Manoj Bhandari, Adv. with Mr. Jatinder Kamra, Advs. for R-3 to 6.

CORAM: HON'BLE MR. JUSTICE G.P.MITTAL

J U M N T

G. P. MITTAL, J. (ORAL)

1.The Appellant National Insurance Company Limited takes exception to judgment dated 09.12.2010 passed by the Motor Accident Claims Tribunal (the Claims Tribunal) whereby while awarding compensation of `13,93,210/- for the death of Sukhjinder Singh in motor vehicle accident, which occurred on 01.06.2006, the Claims Tribunal held that the vehicle was being driven without valid permit in the National Capital Territory (NCT) of Delhi and made the Appellant liable to pay

the compensation with right to recover the same from the Respondents No.1 and 2.

2.The finding on negligence is not challenged by the Appellant, the driver and the owner of the vehicle. The driver and owner (Respondents No.1 and 2) have also not challenged the finding that the vehicle was being driven without valid permit in the NCT of Delhi and thus there was breach of the condition of the policy under Section 149(2)(a)(i)(c) of the Motor Vehicles Act, 1988 (the Act).

3.With regard to the payment of compensation to the third party even in case of conscious and willful breach of the terms of insurance policy, the issue is no longer res integra that the Insurer shall satisfy the decree vis-à-vis the third party.

In National Insurance Company Limited v. Swaran Singh & Ors., (2004) 3 SCC 297 the Supreme Court held that the liability of the Insurer to satisfy the decree passed in favour of third party is statutory. Paras 73, 104 and 105 of the report are extracted hereunder:-

“73. The liability of the insurer is statutory one. The liability of the insurer to satisfy the decree passed in favour of third party is also statutory.

104. It is, therefore, evident from the discussions made hereinbefore that the liability of the insurance company

to satisfy the decree at the first instance and to recover the awarded amount from the owner or driver thereof has been holding the field for long time.

105. Apart from the reasons stated hereinbefore, the doctrine of stare decisis persuades us not to deviate from the said principle.”

Following Swaran Singh, (Supra) this Court in National Insurance Company Limited v. Sanjay Kumar, ILR, 2007 (2), Delhi, 733 held that even when breach of the terms and conditions of policy of insurance in terms of Section 149(2)(a) of the Motor Vehicle Act, 1988 is proved, the Insurance Company would still be required to pay the sum awarded to the Claimant, but would be entitled to the recovery rights against the insured.

In MAC APP 329/2010, Oriental Insurance Company Limited v. Rakesh Kumar and Others, decided on 3[rd] February, 2012, this Court noticed National Insurance Company Limited v. Swaran Singh & Ors., (2004) 3 SCC 297, Sohan Lal Passi v. P. Sesh Reddy, (1996) 5 SCC 21, New India Assurance Co., Shimla v. Kamla and Ors., (2001) 4 SCC 342 and United India Insurance Company Ltd. v. Lehru & Ors., (2003) 3 SCC 338 and held that even when there is willful breach of the terms of policy under Section 149(2)(a) of the Act, the Insurance Company is under obligation to indemnify the liability towards the third party and recover the same from the owner.

7.Thus, the Insurance Company was entitled to recovery rights

against the Respondents No.1 and 2 which have been granted. It is clarified that the Appellant Insurance Company shall be entitled to recover the amount of compensation along with interest from Respondents No.1 and 2 in the execution of this very award without having resort to separate civil proceedings.

8.The Appeal is disposed of accordingly.

9.The statutory deposit of `25,000/- shall be refunded to the Appellant Insurance Company. Appellant Insurance Company.

10.Pending Applications stand disposed of.

JULY 16, 2012 vk

(G.P. MITTAL) JUDGE